Mortgage & Real Estate market update: WHAT’S REALLY HAPPENING IN THE MARKETS?
Week of March 9 2020, An analysis of the Financial Market Meltdown
Mortgage & Real Estate market update:
WHAT’S REALLY HAPPENING IN THE MARKETS?
This is long, but it’s all you need to know.
For REALTORS, home buyers, home sellers…
…and homeowners who “missed” this 1st tiny refinance window.
NO, mortgage rates are NOT 2% today, that is NOT the truth.
But read on for what IS the truth.
Please help us SHARE & TRUTHFULLY inform our community.
How is real estate & mortgage being impacted and what to do (and NOT do).
There are 3 parts to what I’m sharing right here:
1 – How the financial market are impacting real estate & mortgage
2- The strategies you should consider if PURCHASING (or selling) real estate
3- REFINANCE strategies (if you are proactive, you can win big)
FIRST – Here are the high-level reasons mortgage rates “hit bottom” (very briefly)…
1- We are (were?) overdue for a recession…which has always = low mortgage rates.
2- Stock market plummet = investor hysteria = good for mortgage bonds
3- Fed Rate cut DOES NOT directly impact mortgage rates. Fed rate cut means the Fed Funds Rate (& therefore the Prime rate) which are overnight/short-term rates. Long-term MORTGAGE rates are usually priced AHEAD of the rate cut. Stop thinking that, it’s too late at that point, keep reading for how to avoid this common consumer pitfall.
4- The ONLY index that directly impacts fixed MORTGAGE rates are mortgage-backed securities (MBS). MBS prices and mortgage rates work opposite of each other: when MBS are trading high, mortgage rates are low. See the chart here, green is GOOD for mortgage rates (lower rates), and red is BAD for mortgage rates (higher rates). Yes the 10 yr, stocks, oil prices and the Fed Fund Rate all influence and impact fixed mortgage rates, but MBS are directly where daily/hourly pricing of mortgage rates are derived. If you Realtor or Loan Officer isn’t tracking MBS real-time, with a paid service, it’s like driving a 3,000 mile trip only to realize you took the east vs west highway. We track MBS real time, in the best paid service on planet earth, with real time “lock your loan” updates via text, phone, etc. Stay tethered to that type of loan officer for the best chance to win with your loan. Now that you know this, when stocks fall, typically investors put that $ into more secure investments…like MBS…which causes MBS to trade higher, which leads to lower fixed mortgage rates, as you now know accurately. That is exactly what happened for a brief trading hours as you can see in the blue circle on the chart here on Fri 3/6 & Mon 3/9.
5- BUT MORTGAGE RATES SPIKED UP Tue 3/10!!! Yes, now you know how MBS impacts mortgage rates, and you can see that investor emotion/hysteria continues to cause a mass-selloff of everything. One of the HUGE underlying issues (PLEASE MAKE SURE TO READ THIS PART) impacting fixed mortgage rates is that secondary investors are not buying up mortgages due to capacity issues. When a mortgage company closes a loan, they sell that loan off in 30-60 days to free up their credit lines to lend the next loan. When investors aren’t buying those loans, those mortgage companies can’t lend…so their raise their rates artificially to slow new loans coming in the door. You as the consumer don’t get that great rate. Another typical issue is the mortgage branches doing the same thing (raising rates) to keep new loans from coming in the door. The biggest banks in the U.S. are taking 90 day to close your loan. They can’t lock the lowest rates for 90 days…so beware locking your loan there, even if/when rates settle. One credit union this week was quoting a client 3.1% (which was a fake quote on that day as you can now see on the MBS chart), but told her it would be 4 months to close. NO BANK is locking a loan this week for 4 months. That is a mortgage loan officer being untrained, uninformed, and wreckless for the consumer. Our company sells directly to Fannie Mae and Freddie Mac. We have been overstaffed for this sort of capacity for months, knowing 2020 would bring a recession + low rates + more loans. Our purchase commitment is to still close in less than 30 days. Our refinance pipeline we have specific people assigned to handle efficiently. And, yes, we’re at the office a tad bit later and earlier to ensure our clients get locked and closed.
Ok, WHAT YOU SHOULD do if you are buying or wanting to refinance…
for the PURCHASE side of Real Estate and Mortgage…
1- BE PROACTIVE. Assuming you realize we are the best mortgage team to help you in Florida, do your application online NOW, if you are looking to buy anytime in 2020. Knowing is ALWAYS better than wondering. If that random medical collection appears that dings your credit score, you won’t have time to fix that in “the window” of lower rates. But you have time right now. Prior Planning Prevents Poor Performance. Get yourself in line NOW to get your mortgage pre-approval UPGRADED to an Up Front Commitment, and we can help you lock a great rate.
2- Prepare to COMPROMISE. You may not time your sale or purchase at the absolute-lowest/highest-price of all-time. Ditto for mortgage rates. Remember if the end goal is to buy a home you will be in for 3, 5, 10+ years, there is only ONE home in ONE location at ONE price at ONE point in time. Don’t let $5,000 in price negotiations, or 0.00000121% of a rate…or $12.45 in fees take your eye of the big picture prize of your family living in that home and that neighborhood and community for the next 3, 5, 10+ years
3- IT WILL TAKE LONGER. We are in a new time now with purchase transactions and mortgages. EVERYONE will take longer…even if they don’t want to tell you. The biggest issue? Appraisals will take 2-3 weeks. So if you are writing a 30 day purchase contract, get your head out of the sand and realize, while we’re staffed and will hustle to make that a reality still, if an appraiser can’t get us a report for 4 weeks b/c they are so slammed, you may need more time. Appraisal companies are TURNING AWAY orders, just like banks are turning away mortgage apps.
for the REFINANCE side of Real Estate and Mortgage…
1- Focus on being able to lock in the “WINDOW” of the lowest mortgage periods, instead of trying to be the “I got the lowest rate ever” guy at the office water cooler. If you try and time the lowest rate ever, you most likely won’t succeed. What very few Loan Officers will tell you, is that they do NOT sit with every single client’s loan ready to lock. MBS pricing is moving WAY too fast right now (like, huge moves in SECONDS). If a LO tells you they will do that, they literally can only hit a “lock” button for so many clients…none of us truthfully only have 3-5 clients a month, that’s just not the truth right now. Focus on the goal of locking “in the window” of low rates, like the blue circle you see in the MBS chart below. That’s where you win. Who cares if you don’t get 2.875%, but you get 3.125%…your rate is 4.25% now, you’re saving $450/mo and recouping the costs of the refi in 18.26 months. That’s a huge win.
2- BE PROACTIVE. Sound familiar? Email our office at TheMortgageTeam@ChristianPenner.com and we will email you (in next 24-48 hours) a list of 7 basic questions you can answer for us about your current loan, and goals for a refinance, and we can get you a tailored analysis for what rate makes financial sense for you to pull the trigger, and we’ll get you in that “window” in anticipation of what should come in the weeks again, lower mortgage rates again.
3- Be prepared to ANSWER, not QUESTION. Maybe we see rates settle back down next week. Maybe next month. But if you will do #1-2 above, you will be one of the people we help win big in the “window” of lower rates. Those people are proactively prepared to give us an ANSWER (“lock rate!”) instead of QUESTION (“does this make sense, can I sleep on it?”). Ask your questions now, while the window is closed. Have your answer already given to us (“lock me at x rate”) so we can act swiftly in times of opportunity.
MORTGAGE RATES ALMOST CERTAINLY will NOT be in the low 3s today. See the chart below, that’s how much green we need to see. But in the coming days and weeks…get yourself proactively prepared. I will be out today and Monday, I’m keeping my family on a little vacation. But I’ll be ready to receive your emails and get to work for you on Monday. If your need is urgent, my team is available right now to help you. We’re here to help you get through this successfully.
MAKE SURE we get your pre-approval UPGRADED with our Instant Approval App, get you eligible for Offer Accepted, and get you an Up-Front Loan Commitment. It’s all free…all for you to win.
My team and I are here to help! Let the most accurate mortgage forecaster in the area, and the most proactive mortgage team, help you close without chaos!
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Christian Penner, Branch Manager Mortgage Broker West Palm Beach talks about Real Estate West Palm Beach. He also serves other Local Areas and provides home Mortgage Solutions for Palm Beach Gardens, Jupiter, Boca Raton, Wellington and Tequesta. Christian Penner Mortgage Broker Jupiter has the lowest mortgage rates and the best home mortgage programs like; Jumbo loans, FHA Home Loans, VA Home Loans, Reverse Mortgage Home Loans, Freddie Mac Home Loans, Fannie Mae Home Loans and HARP Mortgage Loans. Christian Penner Mortgage Broker Palm Beach Gardens has Served the area for over 18 years with his Home Loan Lending Needs and Works with The Christian Penner Mortgage Team. Ask Me About A Mortgage, Palm Beach Mortgage Lender, West Palm Beach Mortgage Lender, Palm Beach Gardens Mortgage Lender.
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